Trader Steve Grasso owns both Pultegroup and KB Home and remains bullish on their prospects because they are exposed to first-time home buyers. Home Depot, meanwhile, gathered momentum into its quarterly results Tuesday morning, added trader Guy Adami.

"The housing market seems to play to Home Depot's strengths," he said.

Shares look appealing if they drop after the report, Adami noted, but he doubts they will lose ground.

Trader Dan Nathan looked to the iShares ETF, contending that it looks primed to break out. He would buy it with a stop of $28 per share, about $1 lower than where it closed Monday.